Universities faced a crisis in the immediate postwar years. It was a crisis of numbers, brought on by a rising participation rate and the postwar baby boom. The response, led initially by the federal government, was to enlarge the university system, and later the entire postsecondary sector, very rapidly through the 1950s and 1960s. In the process of rapid growth, universities changed dramatically, becoming much more democratic and laissez-faire in their management. Then came a prolonged period of restraint, as provincial governments regained a measure of control and the public became sceptical of the benefits accruing from rapidly rising expenditures in the face of tight fiscal circumstances and competing demands. University faculty attempted to secure their earlier gains through unionization and collective bargaining. The upshot, as was predicted, was that universities became much more rigid organizations, resistant to managed change, and focused on the self-interest of faculty members. We now confront a new and very different environment and face the challenges and opportunities associated with a knowledge-based economy, with its reliance on reserch and innovation, and its demand for a highly educated workforce. The federal government is using its new-found surpluses to invest heavily in university-based reserch and development. The challenge is whether universities, constrained by cumbersome and self-serving decision rules and procedures, now secured in union contracts, can respond appropriately to the new opportunities